If two firms have the same current dividend and the same expected dividend growth rate, their stocks must sell at the same current price or else the market will not be in equilibrium.

Question

Quizplus · Accepted Answer

The current price of a stock is not only determined by the current and expected future dividends, but also by other factors such as perceived risk, market demand, and overall market conditions. Therefore, two firms with the same dividend characteristics may not have the same stock price.

If Two Firms Have the Same Current Dividend and the Same